SEC EXAMS Examination Process
The SEC Division of Examinations (EXAMS) conducts risk-based examinations of registered investment advisors. Understanding the process and preparing proactively can significantly improve your examination outcome.
Examination Timeline
The SEC examination process follows a structured sequence from initial notification through resolution.
Notification
SEC EXAMS sends a document request letter listing specific records, policies, and information to produce before the examination begins.
Document Production
Your firm gathers and submits requested documents including compliance manuals, trade records, client agreements, and marketing materials.
On-Site / Remote Exam
Examiners review documents, interview personnel, and test compliance controls. Exams may be conducted on-site at your offices or remotely.
Exit Interview
Examiners discuss preliminary findings with firm leadership. This is an opportunity to provide context and clarify any misunderstandings.
Deficiency Letter
SEC issues a deficiency letter outlining findings, observations, and required corrective actions. Some exams conclude with no action.
Response & Remediation
Your firm submits a written response addressing each deficiency, describing corrective actions taken, and providing supporting documentation.
SEC Exam Focus Areas
Examiners regularly evaluate these core areas of your advisory business during examinations.
Marketing Rule Compliance
Advertising review, testimonial disclosures, performance presentations
Form ADV Accuracy
Brochure disclosures, material changes, timely amendments
Fee Billing Practices
Fee calculations, billing accuracy, disclosure consistency
Custody
Qualified custodian arrangements, surprise exams, SLOA compliance
Best Execution
Trade execution quality, broker selection, soft dollar arrangements
Allocation of Opportunities
Fair allocation of investment opportunities across client accounts
Valuation
Fair valuation of client assets, especially illiquid securities
Compliance Programs
Annual review, CCO authority, written policies and procedures
2025 SEC Exam Priorities
Key areas the SEC Division of Examinations has identified for focused review in 2025.
Marketing Rule Implementation
Full compliance with the amended Marketing Rule, including testimonial and endorsement requirements, performance advertising standards, and substantiation of claims.
Information Security & Operational Resiliency
Cybersecurity policies, incident response plans, business continuity procedures, and protection of client data and records.
Regulation Best Interest & Fiduciary Duty
Adherence to fiduciary obligations, conflicts of interest management, and suitability of investment recommendations.
Private Fund Advisors
Fee and expense practices, valuation methodologies, conflicts of interest, and preferential treatment disclosures for private fund managers.
ESG-Related Advisory Services
Accuracy of ESG disclosures, consistency between stated ESG strategies and actual portfolio composition, and greenwashing concerns.
Emerging Financial Technologies
Use of AI in advisory services, digital engagement practices, crypto asset advisory activities, and automated investment tools.
Be exam-ready every day
Compliance Approved continuously monitors your compliance posture and generates exam-ready documentation.